Finnair starts consultations with personnel on discontinuing its own engine services and adjusting its component services operations

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Finnair has today announced it has signed a Memorandum of Understanding with the Swiss SR Technics on the sourcing of engine and component services. This cooperation would result in adjusting Finnair’s own component services and discontinuing the company’s engine services operations. Finnair now starts consultations with personnel representatives. These operations currently employ approximately 350 people at Finnair, and the planned changes would result in a reduction of approximately 280 positions.

”This plan is based on a thorough analysis, where we first examined the costs and structures of our own operations, and then compared the results to tens of external service providers,” says Ville Iho, Finnair COO. “Our own engine and component services are unfortunately too small in scale to be cost efficient enough in the long term.”

“This is naturally difficult for our personnel,” says Kimmo Soini, Managing Director of Finnair Technical Services. “Our personnel are highly competent but our volumes are not competitive. There is overcapacity in the market and the competition is intense. We explored partnership opportunities as well, but there was no interest in the market to form a partnership to continue the operations at Helsinki Airport.”

Finnair expects the cooperation with SR Technics in engine and component services to result in significant cost savings for the company, while maintaining high quality of service. The plan is a part of the structural change Finnair started in August 2011. Finnair told then that it explores alternatives to increase the cost efficiency of its engine and component services.

“Finnair focuses on its core business as an airline. We intend to double our Asian traffic and return to profitability. This is possible only if we have a cost base that enables us to build our future on. It is imperative that we implement the structural change we started last year,” says Ville Iho.

The majority of world’s airlines use specialized service providers for maintenance services, and a significant share of Finnair’s component and engine services are already done by partners. Also the majority of the heavy maintenance of Finnair aircraft is done by partners. Line maintenance, which ensures the airworthiness of the fleet and employs approximately 550 people, remains an integral part of Finnair’s flight operations also in the future.

Finnair supports the employees impacted by these changes in finding new employment through its Career Gate service. Career Gate connects employees to companies who have recruitment needs, and explores employment opportunities outside Finnair. Finnair partners in Career Gate with Ministry of Employment and Economy, Centres for Economic Development, Transport and the Environment, employment and economic development offices as well as with companies offering outplacement services.

Finnair announced on August 5, 2011 that it targeted decreases in its annual costs of 140 million euros by 2014. Finnair has already announced that it:
• has chosen Swissport as its partner for  baggage and apron services
• is optimizing the size of its fleet in European air traffic, has discontinued the leases of four Airbus 320 series aircraft, and subleased five Embraer 170 aircraft
• has signed an Memorandum of Understanding on the sales of its catering business to LSG Services
• seeks a partner to accelerate its Nordic Champion strategy and aims to significantly lower costs in European traffic
• has improved its route planning and aircraft utilisation
• is streamlining its support functions as well as  marketing and distribution activities
• has initiated  numerous other savings measures throughout the company.

Source FINNAIR PLC
 

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